Manufacturing activity moved up at a slower pace in June due to lesser production movement, new orders, employment and supplier deliveries, according to a survey.

The Australian Industry Group-PricewaterhouseCoopers performance of manufacturing index (PMI) declined 3.4 points to 52.9 points in June, the second monthly slide in a row.

Even with this slump, the index stayed above 50 points, showing expansion in manufacturing activity for the sixth consecutive month.

In a statement, Australian Industry Group chief executive Heather Ridout said the slacking off in manufacturing growth verified the chronic nature of economic recovery.

"While the performance in recent months points to a positive June quarter both for the sector and the broader economy, there remains a considerable way to go before manufacturing returns to the levels of activity of mid-2008."
Ms Ridout said the inactive state of the new orders sub-index in June was of interest for the sector.

"New orders are a pointer to future directions for output and employment," she said.

"The slower growth in the production and employment sub-indices during June reinforces this concern.

"The sector remains reliant on fiscal stimulus measures and, notwithstanding the better performance of some of the consumer-related sub-sectors, is vulnerable to further interest rate increases."

In the poll of more than 200 manufacturers, eight of the index's sub-sectors grew in June, an increase from seven in the preceding month.

According to PricewaterhouseCoopers global head of industrial manufacturing Graeme Billings, trading conditions for the manufacturing industry continued to be challenging in June.

"The volatile global environment, the cumulative impact of successive interest rate rises on the domestic economy and the ongoing withdrawal of fiscal stimulus, appears to be taking its toll on the manufacturing sector with a marked slowing in the pace of expansion in June," he said.

"The relative strength in some consumer-related sectors during the month is likely to reflect the healthy growth in full-time employment over recent months."
June activity rose in Victoria, Queensland and Western Australia, but plunged in the other states.